No euro but domestic Storebrand tap

Norway’s Storebrand Boligkreditt took advantage of healthy domestic demand and tighter levels to increase a June 2017 Norwegian krone floating rate covered bond by Nkr400m yesterday (Wednesday), taking the new issue size to Nkr2.65bn (Eu356m).

DNB Markets and SEB were dealers on the transaction, which they priced at 102 to yield 56bp over three months Nibor. This compares with a 1.00% coupon when the deal was first launched, according to a syndicate banker on the deal.

“Now it’s almost half the spread,” he said.

Such taps happen on a regular basis in the Norwegian domestic market, which the syndicate banker said is very liquid. The tap was demand-driven rather than triggered by a need for cash on behalf of the issuer, he added.

“There is no problem raising funding in the domestic market,” he said. “We could do more — there’s lots of liquidity. Levels have reached a point where issuers find it attractive to do smaller sizes.”

Two weeks ago Storebrand announced a mandate for a Eu250m covered bond, a strategic transaction that would have marked its return to the euro market after a lengthy absence, but a deal has yet to materialise. Insufficient interest given the small size of the deal being targeted is said to have been a reason for this, with the credit quality of the issuer having been positively received by investors.

The issuer is understood to be considering a range of factors as part of making a decision on the timing of a possible euro transaction, which is not thought to be imminent. The syndicate banker said that yesterday’s domestic market transaction is not a replacement for the euro deal, as the issuer is not in need of liquidity.